LyrArc Article Gist
Critical to move forward in making investments for growth in the Indian economy are the government debt to GDP ratio and GST revenue collections. FInance minister Sitharaman tells parliament that the government debt to GDP ratio is 56.2 % and considerably less than many countries of the leading economies in Europe and the US, less than France and the US, Canada which are in triple digits. GST collections are at 1.49 lakh crores for July 2022, the second highest in history. Inflation is at 7% or below that.  Non performing assets of commercial banks are at 5.9%. She said about 4000 banks in China were reportedly on verge of being bankrupt by comparison and China has huge debt problem for local government. Much of the hard work of the government is makingit possible to set the conditions such as these for basic macroeconomic factors to be put in place for the next stage in India's journey to fulfill the aspirations of its people for a modern and technologically advanced economy with opportunity for all. ...

LyrArc Article Gist
Treasury Secretary Janet Yellen is the only Treasury Secretary who also served as the chairperson of the US central bank the Federal Reserve 2014-2018, and the only woman in these roles. Here she says she toured the country in 2022 a year after joining the Biden administration as head of the finance ministry. What she has seen are the early results of president Biden's  two trillion dollar bills, the Inflation Reduction Act of 2022 and the Science and CHIPS Act 2021, which give manufacturing and new infrastructure building a critical role in a new revitalized America. All across this vast country aging infrastructure is being rebuilt and new infrastructure is changing the landscape. Yellen says the US economy is resilient and growing amidst a global economic slowdown and higher interest rates. The labor market is strong and household balance sheets are healthy, consumer spending robust, says Yellen. It provides the basis for American global economic leadership in the years ahead. ...

LyrArc Article Gist
Fed's Jay Powell says about his interest rate increases of five percentage points at consecutive meetings since March 2022- "We've seen the beginnings of disinflation without any real costs in the labor market. That is really a good thing." Greg Ip of the WSJ looks at the 9 year period of most growth cycles in the US economy since 1980 and says a soft landing could be followed by growth till about 2030. Business investment led to 2.4% growth in the second quarter 2023. More investment is in the pipeline under the Biden economic plan. As inflation is going down to about 3% from 9% at its peak in 2022 the US is set for economic growth that would help it grow in a way that would enable America to meet the challenges of today in climate change, worker incomes and the cost of living, and in need to rebuild the nation's infrastructure in the way it was done in the years after 1945 under Truman and Eisenhower.

LyrArc Article Gist
Paul Krugman's response to Arthur Laffer's recent article warning of the dangers of inflation and rising interest rates, as the monetary base is rapidly expanded by the Fed. Krugman points out that there is one thing Laffer omitted to mention. This is the third time in history that a major economy is facing a liquidity trap, where interest rate cuts have reached their limit, and policymakers and the Fed have to use unconventional measures to keep the economy from a steep descent. Krugman says a rising monetary base isn't inflationary when the economy is in a liquidity trap . He cites facts that the monetary base of the USA doubled between 1929 and 1939, but prices fell 19%. Japan's monetary base rose 85% between 1997 and 2003 but deflation continued in Japan. To reverse course now would repeat the mistakes of that period. And he says the US was experiencing growth in 1937 and 1996, when policy makers reversed course pushing the economy back into a descent, whereas today the US is facing negative growth. ...

LyrArc Article Gist
David Wessel says the U.S. is in a liquidity trap. He says the 500 point drop in the Dow Jones Industrial Averages was a less significant event than the decision by the Bank of New York Mellon to charge clients for keeping large amounts of cash. In a liquidity trap investors are indifferent between keeping their money in cash or in investments providing a return, because interest rates are so low. Today the S&P 500 have in total an estimated $963 billion in cash. The solutions for gettting out of a liquidity trap include government stimulus spending, devaluing the currrency, and generating inflation that could make it easier to reduce government debt. The stimulus approach was adopted in the first 2 years of the Obama administration and there are now increasing pressures to reduce the U.S. deficit. Because of the role of the U.S. dollar as an international currrency and large sovereign holdings of U.S. currency, an outright devaluation of the dollar has not been considered an option. At the same time the weakening of the U.S. currency has helped exports and is encouraged by the Fed and the U.S. government. In a sense all three options are being tried in different degrees and ways. The stimulus was the early response till the deficit concerns began to increase and require attention, the efforts to lower the value of the dollar to increase exports is underway, and the rounds of quantitative easing by the Fed were intended to produce inflation (and avert deflation). All with limited success....

LyrArc Article Gist
Bernanke's defense of the action of the Fed's monetary policy making committee, on November 3, 2010, (with a vote of 10-1) to buy an additional $600 billion of Treasury securities over the next 8 months. His defense focusses on the prospects of deflation- how low inflation can morph into deflation (falling prices and wages), that can create a long period of economic stagnation. In addition, with low and falling inflation, Bernanke sees spare capacity in the US that can be utilized to reduce the number of jobless people. He points to the rise in stock prices and fall in long term interest rates in anticipation of the Fed's action, as evidence that this Fed move would improve financial conditions. Lower mortgage rates would make housing more affordable, higher stock prices would increase consumer wealth, confidence and spending. Spending would lead to higher incomes and profits for economic expansion, from this viewpoint. The situation in November 2010, was a deepening housing slump anticipated for 2011, gridlock after the 2010 midterm elections and no agreement on additional stimulus for 2011, the need to rebalance the global economy lacking cooperation from China (with China increasing imports and reducing exports and the US increasing exports and reducing imports). Fed's Bernanke does not mention these factors, and only hints at the gridlock towards the end of the statement. This Fed action will push the dollar lower, just as efforts to improve exports and the trade balance are underway. The Fed's committee sees the risks of commodities inflation as an acceptable risk in the current situation, and the use of a cautious approach assessing the purchase program regularly as sufficient measure of safety. As to difficulties of the unwinding of these policies, the Fed sees present danger outweighing the risks of no action. For emerging markets such as Turkey, India, Australia and other countries seeing even more inflows of capital, the risks are left to these countries to manage. The central banks of India and Australia moved to increase interest rates at the same time that the Fed made its move....

LyrArc Article Gist
Lulu Garcia-Navarro interviews Homeland Security head Alejandro Mayorkas and asks him direct questions about the border with Mexico, published Feb 2, 2024 in NYT. Why the surge in migrants asks Navarro. Mayorkas is himself a Cuban born immigrant. Republicans in the House are impeaching Mayorkas. Navarro asks can you clearly say what has gotten us to this place and what went wrong? Clearly something had happened in Latin America. Central America drove migrants north after conflicts in Salvador, in Nicaragua and drought affecting Guatemala's agriculture for over 2 decades under different administrations. Mayorkas says in response to the question that the world is experiencing the largest level of human displacement that it has seen since World War II. He says the entire hemisphere is experiencing the enormous displacement in Venezuela as its economy collapsed. During the nineteenth century after president Monroe put forward the Monroe Doctrine that created a uniquely American sphere that asked European powers to stay away from the Americas north and south, any attempt by European powers was seen as an hostile act. It was American opposition to European colonialism. By the time of the Eisenhower and Kennedy administrations this policy was not followed with the intervention of the Soviet Union in Cuba leading to a a wave of refugees from Cuba in the sixties. In the last decade the situation in Venezuela has worsened to the point that 8 million people have left Venezuela for neighboring nations, 2 million to Colombia alone, destabilizing the southern hemisphere. Venezuelans many from the educated middle class form the bulk of the surge in migrants across the US border with Mexico in 2022 and 2023. The problems were actually exacerbated under the Republican administration as the Venezuelan inflation spiralled after 2016 skyrocketing into hyper inflation by 2018 leading to the flow of immigrants outward that reached 8 million. This kind of hyperinflation the worst in the history of Latin America need not have happened with better managing of the crisis at that time. Mayorkas says the problem is that America's system of asylum is broken and both parties need to fix it. This is proposed by Tillis-Graham and Lankford all Republicans in the US Senate with president Biden's support. When he joined the Department of Homeland Security in 2009 Mayorkas says, US Border Patrol chief told him the real problem was that from the moment a migrant claims asylum at the border under US law and the adjudication of that claim it takes several years. This is the root of the problem the law can be fixed with the will of enlightened persons in both parties by simply passing a new law. Immigrants from Latin America are just as likely to vote Republican as Democratic and this may be particularly true for Venezuela's middle class that left the country as the economy collapsed with policies that led to inflation not seen in this hemisphere.  The other alternative is for the US and both parties to agree to what would be today's version of the Monroe doctrine- then opposing European colonialism, now opposing the breakup from within of Democratic countries in Latin America leading to waves of migration north of the border and causing upheavals all over the western hemisphere. Much less a policy of such resolution both parties have failed to fix basic policies of asylum and parole that today are being addressed by legislation being put together by Senator Lankford of Oklahoma, Lindsay Graham of South Carolina, Senator Tillis of North Carolina, three core states that are Republican since the Civil War, with the help of the White House and Senator Schumer. Yet in the House of Representatives Speaker Mike Johnson calls it dead on arrival simply refusing to break the status quo. ...

LyrArc Article Gist
Ideas being considered in the talks to raise the U.S. debt ceiling are a one year extension of the 2 percentage point reduction in the payroll tax for employees. Changes in Social Security being considered are raising the eligibility age from 65 to 67, phasing in the increase till 2036. Another change would be to slow the adjustments in Social Security for inflation.

LyrArc Article Gist
Shehbaz Sharif 70,  is the younger brother of a three term prime minister of Pakistan Nawaz Sharif. He ran Punjab province, the country's largest state when his brother was prime minister. In this way he brings substantial experience to the problems of the economy that now face many developing economies such as Pakistan.  First on the agenda is to normalize relations with the US, rebuild ties with India, and restart negotiations with the International Monetary Fund. Pakistan faces severe inflation of 14% and devaluing currency that makes imports costlier as the foreign currency reserves have dropped to alarming levels of $24 billion when annual import needs are at about $56 billion. This has a direct impact on cost of living, standards of living and on industry. Shehbaz Sharif understands the situation and has said restoring the economy "will take effort, effort and more effort." A similar statement has been made by Mr. Modi in Hindi "sab ka viokas, sab ka prayas" which also mean effort, effort and more effort, which all of South Asia and Bay of Bengal, and South East Asian countries needs considering the impact of Covid pandemic, and now inflation from the war in Europe hitting food supplies. The situation is grim in other parts of South Asia- in Myanmar, in Sri Lanka, in Thailand, Malaysia, Vietnam, Indonesia. The popular sentiment is also shifting as seen in the Indian part of the old British Punjab province. Mostly Sikh this part of old Punjab state in India made a complete change bringing in a new party Aadmi to improve the economy and provide good governance. In this situation all governments are expected to deliver on good governance and the economy.   ...

LyrArc Article Gist
Timothy Roemer, U.S. ambassador to India, interviewed by the Wall Street Journal in May 2011. He is completing two years as ambassador to India and returning to the U.S. He describes the challenges facing the Indian government in the areas of growth, inflation and corruption.

LyrArc Article Gist
India's foreign exchange reserves reached an all time high of $545 billion in October 2022. By December this had dropped to $561 billion because of the central bank RBI's effort to maintain the value of the Indian currency in relation to the US dollar. This is at Rs 81 to the the dollar in Dec 2022. India' needs healthy foreign exchange reserves to finance imports for its industrialization and investment efforts to modernize the country. Inflation is also a priority to keep the cost of living at levels that provide affordability. This is at about 5% in Dec. 2022. Finance minister Sitharaman cited this as key achievements. Including large foreign investment inflows as part of changing the supply chain to include India as a manufacturing hub for the west. This sets the stage for long term growth.

LyrArc Article Gist
As the US central bank, the Fed, considers cutting high interest rates that affect housing costs and mortgages this WSJ report looks at the consumer debt in September 2024. It says consumer debt is at $17 trillion in 2024. This is high except that when inflation adjusted it is only 3% above the consumer debt in 2019, the peak happened in 2008 before the banking induced financial crisis. Then there is the question of what the debt composition is. Here overall debt has grown by 4% yet credit card debt is up 11%, not a good sign when the interest rates charged by banks is 12%, by cards 22%. Households are paying off credit card debt by borrowing from sources with lower interest costs.

This is more evidence why many households are hurting as debt servicing remains as and additional cost of living issue for Americans.

LyrArc Article Gist
Venezuela faces an uncertain future after U.S. efforts to support Mr. Guaido and call for new free and fair elections have failed. With help from Russia the Venezuelan economy is showing signs of recovery from the steep decline and high inflation in 2019. Oil production is expected to reach 1 million barrels a day in 2020 after falling to 650,000- 700,000 barrels a day in 2019. Russia's oil company Rosneft provides critical help for Venezuelan oil sales and maintenance in oil fields.  National Security Adviser John Bolton is faulted for his advice to president Trump on Venezuela, that merely voicing support for 36 year old Guaido, would lead to regime change without action from the U.S. With the recovery in Venezuela with help from Russia and Cuba, Mr. Guaido's popularity has dropped by 20 points to 38%, according to a Venezuelan pollster Datanalisis. Most Cubans and Venezuelans in the U.S. are in Florida where there is support for new elections, and Mr. Trump continues to support Mr. Guaido. The lack of support for change from other countries including Europe, India, Turkey, and Mexico have led to a stalled situation in Venezuela. There is concern for the steep inflation, the migration of about 4.5 million Venezuelans, the shortages of critical supplies as a result of the economic collapse in 2019. The situation is stabilizing for the government yet the future of Venezuela with U.S. sanctions and weak economy leaves Venezuela in a precarious situation. Venezuela continues to be an example of how well meaning changes for social justice can lead to political changes that bring about economic collapse. This happens  when business and the economy flounder under mismanagement and corruption under crony socialism, a variant of crony capitalism. The old capitalist class and the privileged families who ran the country under its old two party system are gone. Replaced with a new class. The trying out of untested economic ideas in the quest for social balance leads to economic mismanagement, loss of critical human resources which leave the country, and a higher degree of poverty with shortages than before.  Today in Latin America Brazil shows how allowing generous pension benefits at the expense of basic needs and public services in the budget can hurt the economy. Argentina's overborrowing once again shows how this leads to IMF loans and harsh economic austerity. Chile shows how not financing pensions and public services can lead to collapse of public confidence and riots. Venezuela shows how the quest for social justice and reducing privilege can itself get flawed, leading to mass migration of as many as 4.5 million citizens. This happens under models that vary from free enterprise models to socialist or nationalist models showing that models can be less relevant than good sense and good management. In the beginning and for some time each of these models worked well, commodity price supported booms concealed real problems. Avoiding extremes, prudent spending, good investment and hard work, investment in education and infrastructure, building consensus, and good management, is critical for the future to avoid the bad outcomes facing much of Latin America. A lesson also for Asian and African countries that basic virtue is more important than socialism or free enterprise or nationalism when it comes to development.   ...

LyrArc Article Gist
Le Monde publishes the speech JD Vance gave at the Munich Security Conference with it says added context and explanation. It is useful because it is easy to make hasty judgements in one direction or another. The focus here is on immigration to EU and to the US, a sore point. Vance does not mention a bigger sore point - the lack of recognition worldwide to the 490,000 American lives lost in the illegal flow of fentanyl into the US without needed action from CMC Canada, Mexico and China. And business as usual carried on by these countries and the European Union, and a failure to act by the US.  JD Vance said- "And of all the pressings—challenges that the nations represented here face, I believe there is nothing more urgent than mass migration. Today, almost one in five people living in this country moved here from abroad. That is, of course, an all-time high. It’s a similar number, by the way, in the United States—also an all-time high. The number of immigrants who entered the EU from non-EU countries doubled between 2021 and 2022 alone. And, of course, it’s gotten much higher since.And we know the situation, it didn’t materialize in a vacuum. It’s the result of a series of conscious decisions made by politicians all over the continent, and others across the world, over the span of a decade." Fact Check- About 14 million of Germany's 84.5 million people are foreign nationals according to Destatis. This is 16.6% of Germany's population. Vance rounds it off to 20% not 17%. In the US there are 47.8 million people who are foreign born or 14.3% of the population in 2023. It increased by 1.6 million from 2022 to 2023, much of it coming from Venezuela and Central American failed states from left parties mismanaging the economy for hyperinflation and from gang violence. In 2022 EU member states welcomed 1.8 million Ukrainian nationals that was only 100,000 in 2021, which is two thirds of the increase. The reason for Vance's doubling. A similar situation happened in the US with Venezuela as a failed state with hyper inflation into 1000 percent inflation leading to migration to other Latin American countries and into the US during the Biden administration. Some of this happened because sanctions made things worse, mismanagement of the economy. A similar migration happened from Syria into the EU member states as a result of the civil war.     ...

LyrArc Article Gist
Sperling shows how Biden's economic plan rescued America and set the stage for America becoming the leader in the G7 economies. Gene Sperling is adviser to president Biden, coordinator of the America Rescue Plan, and had 8 years as adviser in 2000 and 2011 after the financial crisis to previous presidents. Here he says the arguments made that the trillion dollars investment spending Biden and a bipartisan group of senators have supported with legislation in Congress were causing inflation have proved not to be true. Inflation caused by bottlenecks in the supply chain, the pandemic shifts, and the Ukraine war, has come down to 3.4% in Dec 2023. By investing in the US economy, in US manufacturing and US jobs, the US under Biden now has the best economy of the 7 advanced economies with higher growth and unemployment below 4% for 24 straight months, lower inflation apples to apples. Sperling says there were 4 lessons learned during his work with the White House. The first to avoid harm to workers whose lives get scarred by loss of jobs. This happened in 1982 and again in 2008 after the financial crisis. Unemployment took 6 years to recover after 2008. And he says the unemployment rate was 15% for younger workers. For the first time economists like Sperling and Treasury Secretary Yellen have grasped what workers feel and have gone through. Sperling cites the devastation to people's lives - the mental health, the divorce, the loss of earnings and depression. The new policy after 2020 resulted in the fastest drop in longterm unemployment ever with black and hispanic unemployment reaching record lows by 2023. A first ever national eviction prevention policy led to 20% less evictions than prepandemic. Second Sperling says 650,000 jobs were lost by state and local governments in the three years after 2008 financial crisis. State and local budget cuts and mass layoffs seriously hit the economy. This time in after 2020 1.2 million jobs were added with the money in the Rescue Plan and lost jobs recovered in one third the time it took in 2008. Third state and local governments need to deal with the harm coming from the downturn and after 2008 the cupboard was empty. Whereas after 2008 only 154 cities and counties got help to tackle commericial blight, effects on communities, foreclosure and long term joblessness in 2020 Biden was able to send direct funding to all 20,000 local governments and 15,000 school districts. This helped tackle learning loss, crime, and address mental health needs. What a difference it made. Lastly one needed to anticipate something unexpected to happen that flattened projections of recovery. In 2011 3.7% growth projected was flattened when Sperling was senior adviser, and this was flattened by Fukushima nuclear disaster, Arab Spring spike in oil prices, and debt default negotiations. This time there was cushion in the plan so that when covid variants and unexpected Ukraine war happened the rescue could withstand and deliver with resilience. Growth was 3.4% average for the first 3 years of Biden's term and unemployment went down from 8% to 4% for 24 months. Coming from someone who had seen mistakes happen and corrected them, who had served three presidents and the last Biden ,this is a story of how Sperling, Yellen, with the help of Powell at the Federal Reserve, and the bipartisan support put together by a US president in Congress , one who has served the country in the Senate more than any other recent Senator and led the nation with courage, patience and determination. ...

LyrArc Article Gist
Zweig points out that P/E multiples fall quickly in the midst of higher uncertainty. Benjamin Graham's "cyclically adjusted" P/E refined by Yale economist Robert Shiller smooths out the top and bottoms of the market by averaging the past 10 years of earnings and incorporating effects of inflation. This "cyclically adjusted" P/E for the U.S. market for the last 50 years is 19.5. The P/E for the market when the S&P 500 was at 1325 in late July 2011 was 22.9, and at the low in the first week of August 2011 of 1167 was 20.2. With the higher uncertainty- as for instance Bank of New York Mellon charging clients to hold cash- the P/E multiples are in a different territory. The P/E dropped to 13.3 in March 2009 after the financial crisis of 2008. Larger macroeconomic trends and uncertainty may have yet to play out and not registered fully in the market indexes. Jack Hough throws light on this from a different angle in the Wall Street Journal, August 5, 2011 comparing stagnant wages and its relationship with corporate earnings....

LyrArc Article Gist
A large blackout leaves Venezuela's capital Caracas and parts of the country in complete darkness. The blackout was the result of problems at the El Guri hydroelectric dam in eastern Venezuela. Venezuela's power grid has deteriorated rapidly from lack of investment, corruption leading to siphoning off of funds for investment in new turbines and technology, and mismanagement with the power company run by people with little experience in power generation. Initially Electricidad de Caracas was  bought by AES Corporation in the U.S. in 2000, then nationalized by president Hugo Chavez in 2007. The lack of investment is also a result of policies that subsidize power making it practically free, just as in the case of gasoline. 70% of Venezuela's electricity comes from El Guri hydroelectric dam. Hyper inflation estimated at an astounding 1 million percent is ruining Venezuela's economy leading to 3 million refugees into neighboring Colombia and other countries. ...

LyrArc Article Gist
Arthritis drug Humira from Abbvie is shown in this NYT report as having made $114 billion from Humira using the US patent system to delay the introduction of competing products that would have lowered prices for Americans suffering from arthritis. NYT says the114 billion was made just since 2016 when competing products were coming to market. In 2022 this is ending as nine competitors including Pfizer come up with their competing products. In many ways the system of market competition does not operate in the way textbooks or free market advocates say. It is considered ok to engineer advantage within what is a supposedly a market competition system and to turn a blind eye to it. Is it acceptable when it comes to health products and when prices increase from the exorbitant to the outrageous. The Inflation Reduction Act of president Biden included efforts to prevent just such abuses of a market competition system to restore fairness after years of egregious behaviours.

LyrArc Article Gist
The $1.2 trillion bill that was negotiated a day before March 22 deadline will be voted in the House on Friday. Senator Ms. Murray of Washington state and Rep. Rosa DeLauro of Connecticut secured spending on child care and education programs- a 9% increase in Child Care and Development Block Grant, and a $275 million increase for Head Start, $120 million for cancer research.For the Border the spending bill puts in a 25% increase in funding for technology at the southern border, 8000 more detention beds (Congress funded 34,000 beds), 2000 new Border Patrol agents. Shalanda Young, Janet Yellen and Jared Bernstein of the Biden economic team went before a Appropriations committee in the House. Rep. Steny Hoyer said the Congress that passed the Inflation Reduction Act, the Science and Chips Act and other Biden legislation to aid the economy was the best he has seen in 40 years in the US Congress.

LyrArc Article Gist
Achievements of Elvira Nabiullina as central bank chief in Russia since 2013 are the reducing of US dollar reserves from 40% to 11%of $600 billion in Russian reserves shifting to hold most of its reserves in euros, gold or renminbi Chinese currency. She also implemented the alternative to SWIFT the global bank messaging system, and changed the payments infrastructure to process credit card transactions in the country so departure of Visa and Mastercard had minimal effect.

In this way this highly respected banker has protected Russia's economy from western sanctions, says NYT. She is trusted by president Putin and was adviser to Putin in 2012, minister of economic development before that when Putin was prime minister. When Russia suffered an economic crisis in 2014 as oil prices fell sharply and Saudis increased oil production, the ruble fell. Nabiullina increased rates to 17%, and the economy shrank till it stabilized with inflation down to 4% by 2017.

LyrArc Article Gist
The U.S. Labor Department reports nonfarm payrolls up by seasonally adjusted 192,000 in March 2014, with unemployment at 6.7%. Figures for January and February were revised upwards by 37,000. The figure for parttime workers who are looking for fulltime work was up by 225,000 from prior month to 7.4 million. Over the first 3 months of 2014 average hourly earnings were up by 2.1%, barely keeping up with inflation.

LyrArc Article Gist
There are four pillars to this fight Biden and Harris are now waging. Biden tackled infrastructure by getting the Congress to pass the Inflation Reduction Act and the CHIPS and Science Act to put trillions of dollars into rebuilding aging and dilapidated American roads, bridges, airports, ports, rural internet. This also tackled Manufacturing and factory jobs in the US neglected for 3 decades, the second pillar. The third pillar for Biden was getting American wages that had fallen behind to catch up by supporting labor in wage negotiations.  Something was missing as Cost of Living for housing, childcare, remained. This is where Harris has stepped in with Jerome Powell of the Fed. Powell cutting interest rates to make housing more accessible and Harris putting in $25,000 for first time homeowners for a down payment, build 3 million new homes, $6000 for childcare for parents, and $50,000 for small businesses to start. Specific programs at specific targets in FDR type "bold, persistent experimentation" activity. Put together the four pillars mean giving strength to the US economy which Powell says is "in solid shape." ...

LyrArc Article Gist
Yale University professor Robert Shiller, founded CAPE, the cyclically adjusted and inflation adjusted S&P price earnings ratio. It takes the average of the 10 past years of earnings and the inflation adjusted S&P 500 index to arrive at this CAPE P/E ratio. Here he looks at CAPE in 2000, 2007 and 2013, to get a sense of where the U.S. stock market stands today and investor confidence. In 2000 CAPE reached 46, in 2007 it was at 27 and in 2013 it has reached 23. The historical average for CAPE is 15- this goes back in data to 1871. Zweig in the WSJ March 8, 2013, cites data from the last 50 years showing the historical adjusted P/E at 19.7. The investor confidence in the stock market or "valuation confidence" based on work done by Shiller is at 72% for institutional investors and 62% for individual investors in 2013, it was about 80% for both categories before the market peak in 2007. This data is on the website of the Yale School of Management. Shiller says the levels of optimism can fluctuate and change easily, requiring careful thinking by investors. He confirms Browning's assertion in the WSJ March 6, 2013, that in inflation adjusted terms investors are not ahead in the last 13 years, when compared to 2000, based on the inflation corrected S&P Composite total return index....

LyrArc Article Gist
The WSJ Editorial Board speaking for the business community traditional Republican groups finally takes up the election on issues of policy difference between Trump run Republican party and Harris run Democratic Party which it should have from Day One. The former president says something that has never happened in the last hundred years- policy will be decided after the election depending on what he decides to do. Cost of Living action is No 1 on voter priorities. "Drill, Baby Drill," is the whole Republican party platform for cost of living action. What is the Harris Democrats policy plan for cost of living action? WSJ says it is spending blowouts that caused inflation, the Green New Deal, entitlement expansions and student loan forgiveness.The real reason for the increase in cost of living comes from the overconcentration of supply chain by American business in China, on which every president Bush, Obama, Trump, did little or nothing. The lack of an effective vaccination program and ineffective vaccines in China by 2021 and 2022 led to the loss of the supplies from China leading to shortages for automobiles parts and other supplies and surge in prices in 2021-2023. Powell and the US central bank correctly raised rates but cautiously and waited for this to correct, president Biden brought manufacturing home through huge investments called the "spending blowout" that brought down the inflation from 9% to 3%. Some of that "spending blowout" went to chips and science to correct the errors of American Business and Reagan-Friedman theory of the Republican party that created this problem with a culture of utter  indifference to the ultimate costs of who makes what and where. The Inflation Reduction Act also tackled higher health and other costs paid by American workers and families, and invested in public services and in repairing the dilapidated crumbling American infrastructure. Are Republicans saying let the roads, bridges, airports, built in the 1940-1960's heyday of American industrialization as China and India's is now, let them crumble? What do the educated minds of the WSJ Board say about coal in China and India and their effects on their massive use multiple times that of US and EU in history, is it not damaging to the environment and why the Chinese realized the health in North China with coal winter use was worse than in South China cut their coal use. Are they saying lets burn fossil fuels and ignore, and if investment has to be made in solar who is going to do it? Is it Ok for Republicans thet we just import from China all our solar panels indefinitely into the future. "Green New Deal" is just a perjorative term, policy has to be made thoughtfully and without prejudice or bias of any sort for the best that we can do for the American people, ignoring so called "right" or "left." Doing what is right, what makes sense, is a lot harder.     ...

LyrArc Article Gist
A sharp decline in gold prices in 2013 of 19% by October 2013 as central banks in developing economies cut back on holdings of gold. Emerging market economies such as Russia diversified their foreign exchange holdings by buying gold in the period following 2009. With depreciating currencies, efforts to intervene in currency markets and need for foreign exchange as growth slows, central banks in developing economies have cut back on gold purchases. In 2013 central banks are expected to reduce goldbuying by 34%, according to Thomson Reuters GFMS. Private investors fearing rising inflation as the U.S. Federal Reserve loosened monetary policy also increased purchases of gold in this period. With inflation remaining low in 2013 the interest in gold is declining, especially as it does not offer any return and alternative invesments are becoming more attractive.